O C B o a r d o f S u p e r v i s o r s 1 st District Janet Nguyen 2 nd District John M.W. Moorlach 3 rd District Todd Spitzer 4 th District Shawn Nelson, Chairman 5 th District Patricia C. Bates-Vice Chair Internal Audit Department O R A N G E C O U N T Y 6 t h L a r g e s t C o u n t y i n t h e U S A Revenue Generating Lease Audit: OC PUBLIC WORKS/ LAKE FOREST GOLF AND PRACTICE CENTER For the Period October 1, 2012 through September 30, 2013 $1.6M REPORTED GROSS RECEIPTS FOR TWELVE-MONTH AUDIT PERIOD $158,000 RENT TO THE DISTRICT American Golf Corporation operates the Lake Forest Golf and Practice Center located at El Toro Retarding Basin under the lease agreement with the Orange County Flood Control District (District). We audited the underlying books and records to ensure reported gross receipts are supported and rent is properly paid as defined by the lease agreement. During the twelve-month audit period of October 1, 2012 through September 30, 2013, American Golf Corporation reported approximately $1.6M in gross receipts and paid approximately $158,000 in rent for the Lake Forest Golf and Practice Center. The Internal Audit Department found that American Golf Corporation s records for the Lake Forest Golf and Practice Center adequately supported reported gross receipts and rent owed to the Orange County Flood Control District was properly paid. AUDIT NO: 1345 REPORT DATE: JULY 21, 2014 Director: Dr. Peter Hughes, MBA, CPA, CIA Senior Audit Manager: Alan Marcum, CPA, CIA Audit Manager: Lily Chin, CPA, CGMA RISK BASED AUDITING GAO & IIA Peer Review Compliant 2001, 2004, 2007, 2010, 2013 American Institute of Certified Public Accountants Award to Dr. Peter Hughes as 2010 Outstanding CPA of the Year for Local Government GRC (Government, Risk & Compliance) Group 2010 Award to IAD as MVP in Risk Management 2009 Association of Certified Fraud Examiners Hubbard Award to Dr. Peter Hughes for the Most Outstanding Article of the Year Ethics Pays 2008 Association of Local Government Auditors Bronze Website Award 2005 Institute of Internal Auditors Award to IAD for Recognition of Commitment to Professional Excellence, Quality, and Outreach
Independence Objectivity Integrity GAO & IIA Peer Review Compliant - 2001, 2004, 2007, 2010, 2013 Providing Facts and Perspectives Countywide RISK BASED AUDITING Dr. Peter Hughes Director E-mail: Ph.D., MBA, CPA, CCEP, CITP, CIA, CFE, CFF, CGMA Certified Compliance & Ethics Professional (CCEP) Certified Information Technology Professional (CITP) Certified Internal Auditor (CIA) Certified Fraud Examiner (CFE) Certified in Financial Forensics (CFF) Chartered Global Management Accountant (CGMA) peter.hughes@iad.ocgov.com Michael Goodwin Senior Audit Manager CPA, CIA Alan Marcum Senior Audit Manager MBA, CPA, CIA, CFE Hall of Finance & Records 12 Civic Center Plaza, Room 232 Santa Ana, CA 92701 Phone: (714) 834-5475 Fax: (714) 834-2880 To access and view audit reports or obtain additional information about the OC Internal Audit Department, visit our website: www.ocgov.com/audit OC Fraud Hotline (714) 834-3608
Letter from Dr. Peter Hughes, CPA Transmittal Letter Audit No. 1345 July 21, 2014 TO: FROM: SUBJECT: Shane Silsby, Director OC Public Works Dr. Peter Hughes, CPA, Director Internal Audit Department Revenue Generating Lease Audit of OC Public Works/Lake Forest Golf and Practice Center, Parcel J01B01 We have completed our revenue generating lease audit of Lake Forest Golf and Practice Center for the period October 1, 2012 through September 30, 2013. We performed this audit in accordance with our FY 2013-14 Audit Plan and Risk Assessment approved by the Audit Oversight Committee and the Board of Supervisors. Our final report is attached for your review. Each month I submit an Audit Status Report to the BOS where I detail any material and significant audit findings released in reports during the prior month and the implementation status of audit recommendations as disclosed by our Follow-Up Audits. Accordingly, the results of this audit will be included in a future status report to the BOS. Additionally, we will request your department complete a Customer Survey of Audit Services. You will receive the survey shortly after the distribution of our final report. ATTACHMENTS Other recipients of this report are listed on the OC Internal Auditor s Report on page 2. i The Internal Audit Department is an independent audit function reporting directly to the Orange County Board of Supervisors.
Table of Contents Revenue Generating Lease Audit of OC Public Works/Lake Forest Golf and Practice Center Audit No. 1345 For the Period October 1, 2012 through September 30, 2013 Transmittal Letter i OC Internal Auditor's Report OBJECTIVES 1 RESULTS 1 BACKGROUND 2 SCOPE 2
OC Internal Auditor s Report Audit No. 1345 July 21, 2014 TO: Shane Silsby, Director OC Public Works Audit Highlight American Golf Corporation operates the Lake Forest Golf and Practice Center located at the El Toro Retarding Basin under the lease agreement with the Orange County Flood Control District. During the 12-month audit period ending September 30, 2013, American Golf generated approximately $1.6 million in gross receipts and paid the Orange County Flood Control District approximately $158,000 in rent. We found that American Golf s records adequately supported reported gross receipts and rent paid. FROM: SUBJECT: Dr. Peter Hughes, CPA, Director Internal Audit Department Revenue Generating Lease Audit of OC Public Works/Lake Forest Golf and Practice Center, Parcel J01B01 OBJECTIVES We have performed an audit of certain records and documents for the period from October 1, 2012 through September 30, 2013, pertinent to the lease agreement (Agreement) between the Orange County Flood Control District (District) and American Golf Corporation, a California Corporation (American Golf), dated January 31, 1990, as amended. The Agreement is for operating the Lake Forest Golf and Practice Center located at the El Toro Retarding Basin. Our audit objectives were: 1. The primary objective of our audit is to determine whether American Golf s records adequately supported their monthly gross receipts reported to the District and rent owed is properly paid. 2. The secondary objective of our audit is to determine whether American Golf complies with certain other financial provisions of the Agreement, such as monthly gross receipts statement format and annual financial statement requirements. In addition, while performing the audit we may identify internal control weaknesses for which we will identify suggestions for improvement. RESULTS Objective #1: We found that American Golf s records adequately supported gross receipts reported to the District and rent owed was properly paid. Objective #2: We found that American Golf complied with certain other financial provisions of the Agreement such as the monthly gross receipts statement format and annual financial statement requirements. Revenue Generating Lease Audit OC Public Works/Lake Forest Golf and Practice Center Audit No. 1345 Page 1
OC Internal Auditor s Report BACKGROUND The Orange County Flood Control District (District) entered into a lease agreement (Agreement) with American Golf Corporation, a California Corporation (American Golf) dated January 31, 1990, as amended, for the operation of golf course related operations which consist of a driving range, snack bar, pro shop, and golf instruction located at the El Toro Retarding Basin in conjunction with adjacent land owned by the City of Lake Forest. During the 12-month audit period ending September 30, 2013, American Golf generated approximately $1.6 million in gross receipts at the Lake Forest Golf and Practice Center and paid the District approximately $158,000 in rent. American Golf also pays rent to the City of Lake Forest for the adjacent property. SCOPE Our audit was limited to certain records and documents that support American Golf s gross receipts reported to the District for the twelve-month audit period from October 1, 2012 through September 30, 2013. Our audit included inquiry, auditor observation, and limited testing for assessing the adequacy of documentation and ensuring completeness of reported gross receipts. Acknowledgment We appreciate the courtesy extended to us by the personnel at American Golf Corporation, OC Public Works, County Executive Office/Corporate Real Estate, and OC Public Works/Accounting Services during our audit. If you have any questions regarding our revenue generating lease audit, please contact me directly at (714) 834-5475, or Alan Marcum, Senior Audit Manager at 834-4119. Distribution Pursuant to Audit Oversight Committee Procedure No. 1: Members, Board of Supervisors Members, Audit Oversight Committee Michael B. Giancola, County Executive Officer Mark Denny, Chief Operating Officer Jessica O Hare, Assistant to the Chief Operating Officer Robyn Uptegraff, Assistant Director, OC Public Works Mary Fitzgerald, Director, OCPW/Administrative Services Carolee Condon, County Executive Office/Corporate Real Estate Josie Alvarez, County Executive Office/Corporate Real Estate Patricia Bigger, County Executive Office/Corporate Real Estate Kevin Onuma, Manager, OCPW/OC Flood Howard Thomas, Section Manager, OCPW/Accounting Services Win Swe, Manager, OCPW/Accounting Services Brian Cich, Senior Accountant I, OCPW/Accounting/Leases and Infrastructure Randi Dunlap, Manager, Policy and Compliance, CQA, OCPW Foreperson, Grand Jury Susan Novak, Clerk of the Board of Supervisors Macias Gini & O Connell LLP, County External Auditor Revenue Generating Lease Audit OC Public Works/Lake Forest Golf and Practice Center Audit No. 1345 Page 2